TEHRAN: President Mahmoud Ahmadinejad said on Saturday that Tehran was hopeful of completing its section of the Pakistan-Iran gas pipeline by the end of next year.

â€œConstruction of the pipeline to export Iranian gas to Pakistan is under way, and we hope it will reach the frontier by the end of 2012,â€ he said of the multi-billion-dollar project after a meeting with President Asif Ali Zardari.

President Zardari, who arrived in Tehran on a day-long visit, held two rounds of talks with President Ahmadinejad â€” first delegation-level talks and then a one-on-one meeting.

The two leaders also reviewed progress on a proposal for the transmission of electricity from Iran to Balochistan.

They expressed confidence that joint efforts would prove helpful in countering terrorism, terming the menace a common enemy for the region and the world.

Mr Ahmadinejad said his country looked forward to a new era in relations with Pakistan.

â€œIran is ready to reinforce its cooperation with Pakistan in every field,â€ the Iranian president said.

Mr Zardari said relations between the neighbours should be strengthened, and proposed that â€œtrade between the two countries be conducted in local currency, and not the dollar, to curb smugglingâ€. He also proposed a bilateral free trade agreement.

The President said Pakistan was already in negotiations with Turkey, Sri Lanka and China for the currency swap arrangement.

He denounced â€œefforts by our enemies who seek to show that the Pakistan government is unstable by provoking trouble,â€ saying that those responsible would face justice.

He urged the Iranian government to consider the creation of an integrated border management regime for tackling militancy and extremism. He said Pakistan and Iran had vital interests in stability and peace of the region.

Mr Zardari called for developing coordination between governments to curb narcotics and human trafficking in the region. He said Pakistan, Iran and Afghanistan faced a common menace of drug trafficking and expressed the hope that a trilateral initiative would help counter the curse.

The President said Pakistan and Iran had the potential to undertake joint economic projects in Afghanistan to enhance connectivity, build infrastructure, rail and road links.

Mr Zardari said there was a need to raise bilateral trade to four billion dollars from one billion dollars. He called for working together to identify impediments to implementation of the Pakistan-Iran Preferential Trade Agreement, signed in 2006.

The Iranian president agreed to take full advantage of geo-strategic locations for â€œushering in a new era of progressâ€.

About the Afghanistan issue, President Zardari said Pakistan supported the process initiated by President Hamid Karzai for reconciliation and peace. He said Pakistan supported a reconciliation process which must be Afghan-led and Afghan-owned, adding that Islamabad was ready to provide all possible assistance to Kabul in reconstruction efforts.

It was Mr Zardariâ€™s second visit to Iran in less than a month. He visited Tehran last month to attend the counter-terrorism summit, on the sidelines of which the two countries and Afghanistan reached an agreement to augment cooperation in the fight against militancy.